Analysis of the External Environment of Primark

Running head: PRIMARK
PRIMARK
Name of the Student
Name of the University
Author Note

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Executive Summary
The given report follows a systematized format whereby the relevant changes in the domain of
the United Kingdom fashion industry have been analyzed. The company taken for reference is
the Primark fashion stores based in UK. The report begins with a brief introduction which is then
followed by a brief analysis of the external environment of the United Kingdom fashion industry.
This is followed by the internal analysis. Recommendations based on the relevant changes have
been made.

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Table of Contents
Introduction......................................................................................................................................3
Introduction to the Company-Primark.............................................................................................3
Key relevant changes within the UK Fashion Retail.......................................................................4
Macro Environmental Changes...................................................................................................5
Relevant changes within the Micro industry: Porters Five Forces..................................................7
Discussing relevant strategies..........................................................................................................9
Recommendations..........................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................13
Appendix........................................................................................................................................15

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Introduction
Fashion retailing can be described as the retailing which sells clothes, accessories and
apparels to consumers. The fashion retail dynamics comprises of a group of companies which
tend to be a part of the supply chain in fashion. It goes from the manufacturers to the consumers
by offering fashion goods to different individual. It goes through seasonal spans and particular
fashion timing and a specific budget (Jonathan and Wood 2010). The given report will be
discussing the different changes in the retail fashion industry in the United Kingdom. The
company chosen as a reference for the given assignment is the Primark fashion stores in the
United Kingdom. The report will be following a structured format whereby the different aspects
of the UK fashion industry will be analyzed with a holistic approach.
Introduction to the Company-Primark
Primark is an Irish clothing company and is a subsidiary of the AB foods company. The
organization has its headquarters in Dublin and since then it has been able to maintain its brand
name. The store was found by Arthur Ryan on behalf of the family (Vogel and Güttel V2013).
As the store found success in Ireland, it expanded to the United Kingdom and thereby it has a
large store now in Derby, England. The company has its headquarters in Dublin at present.
The store offers a wide variety of products which includes newborn, children`s clothing,
women wear, homeware and accessories. The company also sells a wide range of foot wear,
beauty products and con factionary. Back in 2014, the company also started selling Sephora
products. The company sells clothes at their lowest cost and has contributed largely to the fast
fashion trend. The unique selling point of the company is that it sells extremely good quality
products at low prices which work well for the given organization (Evans 2011). The company

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owns around 350 stores and the largest one is located on Market Street in Manchester thereby
occupying 155000 square feet. The company started expanding its business in the mid-2000s.
With various stores all around the globe , the company opened its first store in the United States
(Primark.com. 2018).The company also has its stores in France, UK, Germany, Italy and Ireland
as well.
Figure 1: Primark revenue growth 2007 - 2015 (in million GBP) (Source: Martinsuo 2013).
Key relevant changes within the UK Fashion Retail
The business environment of a business plays a crucial role in the functioning of the
different businesses. The UK clothing retail industry has both macro as well as the micro factors.
The macro environmental factors comprise of the broad environmental factors whereby a
framework like that of PESTLE Analysis will assist in understanding of the changes which take

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place in the business environment. On the other hand, for the purpose of the micro environmental
analysis the framework of Porters Five Forces will be used.
Macro Environmental Changes
The PESTLE Analysis comprises of different environmental factors such as Political,
Economic, Social, Technological, Environmental and Legal.
Political Factors
The Brexit move which took place in the year 2016, had a great impact on the entire
economy. The event caused high amount of Political as well as economic upheaval and
uncertainty. The British Saga bought about great changes in the operations of the fashion
industry as well. This is because, the change in the foreign currency and the weak pound which
fell against Euro and Dollar caused uncertainty in the financial markets as well (Wheelen et al.,
2017). The move had an impact on the profits of different companies which then caused
uncertainty among the fashion members.
Economic factors
The primary economic factor which had an impact on the Fashion industry was that the
pound sterling took a huge blow. This had a huge impact on the status of London as a financial
hub and hence, many companies started to disinvest in their operations and the prices took a blue
(Burt and Sparks 2003). Although this had a negative impact on the business in the beginning,
various experts have predicted that this shall have a positive impact on the functioning of the
business in the long run with various fashion stores like Primark and other retailers gaining
translation benefit.

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Social factors
There are various social factors which tend to have an impact on the business and its
performance. The different social trends and factors having an impact on the growth of plus size
fashion has been as follows:
Growth in the plus size fashion
The largest social cultural trend which is having an impact on the clothing retailers and
fashion stores in the United Kingdom is the rise of the ageing population in the United Kingdom.
According to the statistics almost 7 out of 10 British men and 6 out of 10 women are obese. This
has given rise to the trend that the stores need to stock in more plus size ranges and sizes for
these women (Zott and Amit 2013). This obesity has tend to provide a major gap for the retailers
who can then cater to the needs of these customers and start a new trend.
Ageing UK population
The ageing population of the United Kingdom and their labor dynamics as well have
been changing considerably and there has been increase in the ageing population and the median
age as well. Statistic also reflect that in the year 2019, the ageing population will become even
closer than earlier (Team 2013). This gives rise to different business operations and opportunities
as they have a stable pension and income scheme. Hence, many of them have been buying
around many apparels online using online mediums.
Technological factors
With the advent of technology and the growth in the e-commerce domain, the
competition has increased severely and the UK Clothing retail has emerged considerably. The

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new channel of distribution has been changing considerably and the companies who do not have
an online domain have been suffering considerably. Companies like Primark have been facing
problems as they do not have an ecommerce presence and hence, they tend to decline
considerably.
Environmental factors
The different trends which have been having an impact on the UK Clothing industry and
fashion dynamics is the rise of ethically and environmental conscious customers. These
consumers tend to demand the different firms and organizations to adopt different practices like
the use of paper packaging and different recycled materials (Wright, Paroutis and Blettner 2013).
Various retailers like H & M have tried to launch different styles of sustainable clothing lines.
Legal Factors
Different governmental legislations tend to put on pressure on the different companies to
adopt proper methods of waste disposal. They also trend to be affected by different employment
and other related regulations in general.
Relevant changes within the Micro industry: Porters Five Forces
The micro environmental factors are the factors that lie within the industry and tend to
have an impact on the dynamics of the company. The micro environmental analysis can be done
using the tool formulated by Michael Porter (Angell et al. 2012). The Michael Porter`s Five
forces analysis is an effective tool which can be utilized effectively in order to be able to see to it
that the different factors which are present in the micro environment can be analyzed effectively.
The different components of the Five Forces are as follows:
 Bargaining Power of Suppliers

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 Bargaining power of Consumers
 Competition from existing players
 Threat of new entrants
 Threat of substitutes
Bargaining Power of Suppliers
The bargaining power of suppliers generally tends to be high when no adequate resources
are available. In the fashion industry, the suppliers comprise of different vendors who tend to
provide cotton and other textile products (Stead and Stead 2013). There are a few suppliers
present in the industry as the cost of raw materials is quite high. The analysis gives the hint that
the bargaining power of the suppliers is fairly high.
Bargaining Power of Consumers
The bargaining power of the consumers takes a rise when there are numerous players
with a large product line. The present condition of the UK Fashion Industry tends to provide the
different consumers with a wide variety of options which allow them to possess a high
bargaining power.
The different players in the market are Marks and Spencer’s, Austin Reed and others.
Competition from Existing Players
The United Kingdom is characterized by the presence of Global players which tend to
form a barrier for Primark (Lasserre 2017). The competition is really tough in the different
segments of the target market and hence, it can be stated that the competition among the existing
players is quite high and the market leaders tend to form a policy in favor of their brands.

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Threat of New Entrants
The threat of the new entrants is not that high. This is because there are several parties
which tend to act as a major player in the market. These are the players like Spencer’s, next and
Marks and Spencer’s. Hence, the new players will not have a power to challenge the present
players.
Threat of Substitutes
The substitutes of these products are very high and they are highly similar to that of the
original ones (Alkhafaji and Nelson 2013). The customer segments as catered by Marks and
Spencer’s are very niche on nature and hence, such premium products tend to stop the different
customers from purchasing local substitutes. Hence, in this scenario, the threat of substitutes is
low.
Discussing relevant strategies
Therefore, from the Macro environmental analysis it can be stated that the different
challenges that Primark is exposed to is as follows:
1. The rising trend in the plus size
With the change in the demographics and the social dynamics, the rise in the trends
relating to the demand of the plus size has brought about a huge revolution in the given industry.
Hence, when the different stores who stock the plus size products are able to attract a larger
crowd, it serves as a competition to the Primark stores who is unable to adapt to the changing
needs of the environment (Merat and Bo 2013). The customers who are unable to find the right
products for themselves tend to get agitated and are bound not to visit the given store again.

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Hence, Primark needs to ensure that it takes adequate measures in order to combat against these
given forces.
2. Technological advancement
With the advent of technology, the e-commerce trend has become fairly very popular and
various fashion retailers have taken advantage of this and entered into the domain of e-commerce
business. The different e-commerce retailers can gain access to various customers all around the
globe (Barney 2014). Furthermore, the establishment costs also tends to decrease considerably
when the stores go online. The customers can have 24 hour access to the websites which has a
positive impact on the sales of the company as well. However, Primark has not entered into the
e-commerce domain yet and this has affected the firm`s performance in the fashion industry.
3. Sustainability
Various customers have also been expecting the different fashion retailers to enter into
the domain of sustainability and can become a rather environmental conscious brand. These
companies can ensure that they are taking out environmental friendly goods for the different
consumers and the different resources are not getting tampered.
The given challenges have been indemnified from the micro environmental factors:
4. Premium segment offerings
The competitor Marks and Spencer’s has gotten into the premium domain which has
made competition very severe for the given brand (Betts and McGoldrick 1996). The premium
brand is very difficult to provide competition to and hence, this tends to pose as a huge threat to
the Primark`s operations

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5. Competitors
The different competitors also tend to offer sustainable products which acts as another
threat.
Recommendations
The given recommendations have been provided for the given challenges which have
been identified:
1. Investing into the e-commerce domain
The company needs to start investing into the e-commerce domain. The Primark
Company needs to form an e-commerce website which will be serving the different customers
from around the globe. This will help the company to boost its sales adequately.
2. Planning to offer a premium segment
Just like Marks and Spencer’s, even Primark can exploit its resources and enter into the
premium segment. This premium segment can offer luxurious products at good prices which will
then enable the firm to cater into a new segment of market.
3. Product line extension
The company can start catering to the needs of the plus size segment. By getting into the
given segment the company can make huge profits as the demand for these products have been
increasing considerably.
Conclusion
Therefore, from the given analysis, it can be stated that Primark has been one of the
oldest brands present around in the United Kingdom. It has been ding considerably well and due

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to this it is one of the most trusted brands which are present around the globe. However, the
business dynamics have been changing considerably and due to this, there has been existing a
change in the functioning of the UK retail fashion industry as well. The report laid down various
external as well as internal environmental factors which have been changing in the given
domain. It has also made certain recommendations based on the same.

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References
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control in a dynamic environment. Routledge.
Angell et al. 2012. ‘understanding the older shopper: A behavioural Typology. Journal of
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Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Betts, E and McGoldrick, P. ,1996. "Consumer behaviour and the retail “sales”", European
Journal of Marketing, Vol. 30 Iss 8 pp. 40 – 58.
Burt, S. L. and Sparks, L. ,2003, Power and Competition in the UK Retail Grocery Market.
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Evans J ,2011. ‘Retailing in perspective- the past is prologue to the future “ International Review
of Retailing and Consumer Research, Vol. 21, No. 1, February 2011, 1–3.
Jonathan R and Wood, S (2010),"Location decision making in retail firms: evolution and
challenge", International Journal of Retail & Distribution Management, Vol. 38 Iss 11/12 pp. 828
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Lasserre, P., 2017. Global strategic management. Palgrave.
Martinsuo, M., 2013. Project portfolio management in practice and in context. International
Journal of Project Management, 31(6), pp.794-803.
Merat, A. and Bo, D., 2013. Strategic analysis of knowledge firms: The links between
knowledge management and leadership. Journal of Knowledge Management, 17(1), pp.3-15.

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Primark.com. ,2018. [online] Available at: https://www.primark.com/en/homepage [Accessed 21
Jun. 2018].
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Team, F.M.E., 2013. PESTLE Analysis. Strategy Skills. Free management ebooks, p.15.
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Wright, R.P., Paroutis, S.E. and Blettner, D.P., 2013. How useful are the strategic tools we teach
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Zott, C. and Amit, R., 2013. The business model: A theoretically anchored robust construct for
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Appendix
PESTLE Table of UK Fashion Industry